Pemex plans $1.65 billion redevelopment of Gulf oil field

Mexico’s state-run oil and gas giant Pemex has signed an agreement to redevelop oil fields in the Gulf of Mexico in a $1.65 billion investment plan that aims to increase production 10-fold over the next 3 ,5 years.

Citing unnamed sources close to the deal, Pemex (Petroleos Mexicanos) has struck a deal with CEM Oil and Gas, a Mexican private sector player, to redevelop the Bacab and Lum fields in the Gulf of Mexico.

The Bcaba and Lum oil fields produce heavy oil in shallow water at a depth of about 200 feet; however, according to data from Offshore Technology, the fields have recovered over 93% of total recoverable reserves and reached a production peak in 1993. Without redevelopment, the producing oil field will exhaust its currently recoverable reserves in 2033.

Both oil fields are in the massive Ku-Maloob-Zaab play, which covers 121 square kilometers and includes five fields.

According to Bloomberg sources, CME will extend the depth in both plays to increase production to 40,000 bpd by 2028. The $1.65 billion investment will be made over 15 years, and CME is assuming the costs and risks associated with the plan to redevelopment.

Bloomberg sources said the plan calls for 74 million barrels of production and $4.3 billion in revenue, half of which goes to state coffers.

Pemex did not respond to Bloomberg and the reports have not been independently confirmed.

Once one of the most successful oil companies in the world, Pemexhas fallen further and further into debt over the past decade, surviving only by pursuing cheaper shallow-water oil operations and being bailed out by the government. Recently elected Mexican President-in-Office Claudia Sheinbaum is expected to continue to support President Andres Manuel Lopez Obrador’s (AMLO) ambitious plans for oil and gas despite Pemex’s setbacks.

By Tom Kool for Oilprice.com

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